Economics: October data shows a lackluster economy as public finances deteriorate further and the inflation outlook remains murky

MEXICO - Report 04 Nov 2024 by Mauricio González and Francisco González

A review of indicators published in October confirms the slow coasting of the economy and an accelerating deterioration of public finances. Industrial sector growth trickled to a mere 3 bps in August, largely in response to a sharp drop in civil engineering works, while manufacturing again grew by less than a percentage point. GDP growth has improved somewhat, but at best has only matched our 1.5% estimate for full-year 2024. Public finances have accelerated their deterioration as the new administration steps up spending with no fiscal reform in sight.

Resistant non core prices provoked another rebound in inflation, while core services inflation remained high. Further clouding the picture, the erosion of business confidence that got underway in mid 2023 has been accelerating in recent months as President Sheinbaum steps up her efforts to reassure business leaders at home and abroad.
 

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